TommyWonk

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Thursday, March 31, 2005

Guckert/Gannon's Alma Mater Coming to Delaware

The Leadership Institute--the school that taught Guckert/Gannon everything he knows about journalism--is bringing its Grassroots Campaign School to Delaware. The program will be held April 9 & 10 in Newark and is advertised on the Delaware Republican website.The Leadership Institute, which describes itself as "the premier training ground for tomorrow's conservative leaders", is a 501(c)3 founded by Morton Blackwell, whose bio asserts:

Having worked actively in politics for more than forty years, he has probably trained more political activists than any other conservative. Starting in the 1960s, he has trained thousands of people who have served on staff for conservative and Republican candidates in every state.

Wonk Alert

For those who go for this kind of thing, Atrios just highlighted this debate on the U.S. "twin deficits" on Econoblog. Pay attention, this stuff is going to affect our future prosperity.As Robert Rubin has said, capital markets respond to signals in divining the future. If foreign holders of U.S. debt had reason to think that budget deficit would begin to decline, we might read fewer stories about them reducing their dollar holdings. What is discouraging about the Bushies is their faith that the market can absorb seemingly endless growth in U.S. government debt.

As such, in many ways it is the responsibility of those who have made it to do everything within our power to lift up our disadvantaged kin before we call on government or mainstream America to fix our problems. While ultimate responsibility rests with the individual, we too must be accountable for what is happening within "our" communities....The answer to the plight of the inner city, to the plight of Wilmington, is first that we recognize the “crisis of values” that is beset on all of us – in and outside of the city limits and that we seek to rebuild the least advantaged among us.

I know and respect many of the members of this group. When a group of leaders come together to examine their own roles in the larger community, their thoughts deserve our attention. Let's hope these leaders can spark some deeper discussion.

Misstatements and Restatements

The AP reports that AIG has asked for a second delay in filing its 10-K with the SEC while it sorts out the meaning and impact of the finite reinsurance deals with Berkshire Hathaway and other firms:

AIG said its 10-K filing with the Securities and Exchange Commission would be delayed until April 30 to provide AIG, its board and its new management adequate time to complete their review of its books and records.

New York-based AIG had previously gotten a delay in the filing until March 31 after Maurice Greenberg said he was retiring as chairman of the company he had built into one of the world's largest insurers. He was ousted by the board as chief executive two weeks earlier because of the intensifying regulatory probes.

Estimates of AIG's coming restatements based on the ongoing investigations range from $1 billion to $3 billion.For those who like this sort of stuff, here's Enron's classic news release dated November 8, 2001 detailing the financial restatements that brought the company down.Update: AIG announced that accounting corrections stemming from its internal nquiry will reduce shareholders' equity by $1.7 billion. The announcment cautions that the company has not completed its review:

The investigations and AIG's review are continuing, and AIG cannot presently determine whether additional matters will be discovered or further adjustments will be required.

Who Needs Congress?

According to CNN (thanks to TPM for the alert), President Bush might be considering using his executive powers to use the federal employees' pension system as a test case for his unpopular idea to divert SS payroll taxes to private accounts--even though congress is controlled by his own party.

Tuesday, March 29, 2005

Warren Buffett and AIG

Warren Buffett has agreed to be interviewed by SEC investigators looking into suspicious reinsurance contracts between AIG and General Re, which is owned by Berkshire Hathaway. According to a company statement, Buffett was not familiar with the details of the $500 million reinsurance contract, which first prompted the investigations by the SEC and New York Attorney General's office.According to his lawyer, David Boies, Maurice Greenberg has agreed to relinquish the post of chairman, his last connection with AIG, which he ran for 39 years. The SEC has subpoenaed twelve AIG executives in the probe, which is reviewing finite insurance contracts which may have been used to manipulate AIG's financial statements.

Stranger than Fiction

He's not a journalist, but he plays one at the National Press Club.Editor & Publisher is questioning what "Jeff Gannon" is doing on a panel at the National Press Club:

Gannon, whose real name is James Guckert, resigned his job with the conservative Talon News last month after it was revealed he had used a pseudonym, had little journalism background, and had ties to male escort Web sites.Still, Press Club leaders will include Gannon on the panel April 8 that includes Wonkette.com editor Ana Marie Cox, National Journal's John Stanton, and others. Gannon has been asked on numerous occasions about charges that he worked as a prostitute, and has refused to deny them.Gannon told E&P today that he always considered himself a legitimate journalist, and "perhaps their invitation is recognition of that."

Daily Kos has tried and failed to locate evidence that G/G served in the military, as he claimed on his Conservative Guy website.

Lord Black and Shareholders' Rights

Lord Conrad Black has been dealt another setback in his efforts to regain control of Hollinger International Inc. The Ontario Securities Commission, which last year suspended all trading by Hollinger executives, has kept kept the freeze in place, blocking his bid to buy out other shareholders at a company meeting scheduled for March 31.Last year, a study commissioned by the Hollinger board found that Lord Black had looted the company to the tune of $400 million. The Ontario Securities Commission decision blocks Lord Black from using his ill-gotten gains to take control at the expense of other shareholders.Lord Black's lawyer characterized the bid for the outstanding shares as the last chance for shareholders to get their money out of the company--a not very subtle threat from someone who has habitually ignored the interests of minority shareholders.Delaware Chancery Court had blocked Lord Black from seizing control of Hollinger in a coup that would have stripped the board of its governance power. What this case is about is whether a majority shareholder can act in defiance of the board and shareholders of a publicly traded company.

Monday, March 28, 2005

Impish Gravitas

This has got to be the silliest story of the day: Elisabeth Bumiller in the NYT with the headline, "President Bush's New Public Face: Confident and 'Impishly Fun'", which related several of W's wisecracks, and asks the burning question, "Is this a new George Bush?"Ms. Bumiller is careful to present a balanced--one might even say nuanced--portrait of the president, by including a serious note from the president's chief of staff:

"The president still carries tremendous burdens," said Andrew H. Card Jr., the White House chief of staff. "I see that every morning when he walks into the Oval Office and gets the overnight reports as to what's been happening in the war on terror. He has to make decisions in many more areas of responsibility than most people realize."

To sum up, the president is confident, fun-loving but serious, and has to make a lot of decisions.Update: If you want to read a sharper dissection of Ms. Bumiller's piece, go to The Daily Howler.

Friday, March 25, 2005

Murky Dealings at AIG

The board of directors of insurance giant AIG have been given a report that identified a series of questionable deals, known as finite reinsurance transactions, designed to boost its earnings, according to the WSJ:

AIG is weighing a move to clean up accounting mistakes totaling as much as $3 billion from as many as 30 transactions. The big insurer has yet to assess an additional 60 transactions that internal investigators have flagged as potential problems.

To put that figure in perspective, AIG reported $8 billion in net income in the first three quarters of 2004. Ten days ago the company announced that it had delayed filing its 10-K or annual report with the SEC, but that, "AIG does not believe that any of the matters subject to the review are likely to result in signifiicant changes to AIG's financial position."The NYT reports:

Also under scrutiny is Starr International, a privately held company that is used primarily as a compensation vehicle for A.I.G. executives and employees. The company has $19 billion in A.I.G. stock "available for future distribution," according to a recent filing.

Depending on the stock prices at the time of the filing, $19 billion could represent 10 to 13 percent of the AIG's total market capitalization.Another related entity under scrutiny is Richmond Insurance, a reinsurer based in Bermuda. AIG owns 19.9 percent of Richmond. (Reinsurance contracts with related entities could be used to manipulate financial statements.) Deposed chairman and CEO Maurice Greenberg is also president and CEO of yet another entity, C.V. Starr, which is said to have done business with AIG.So far this month, questionable finite reinsurance deals have been placed under review; dealings with related entities are being investigated; Maurice Greenberg was pushed out by the board after 39 years; two senior executives were fired for not cooperating with regulators; and restatements are as high as $3 billion and counting.

Thursday, March 24, 2005

Today's Lexical Lesson

For those who have seen the word "theocon" (rhymes with neocon) used recently, the Word Spy has this citation from 1996:

The neoconservatives believe that America is special because it was founded on an idea—a commitment to the rights of man embodied in the Declaration of Independence—not in ethnic or religious affiliations. The theocons, too, argue that America is rooted in an idea, but they believe that idea is Christianity.—Jacob Heilbrun, "Neocon v. Theocon," The New Republic, December 12, 1996

I'm guessing that theocon is becoming more popular because of the increased use of neocon to identify the other ideological pillar of the Bush administration.

Wednesday, March 23, 2005

Tom DeLay, Emerging from the Shadows

Until recently, Tom DeLay was a name known mostly to wonks and politicos. But that has been changing according to a poll quoted in The Hill:

The latest spate of broadcasts and articles, a glut of the type of negative coverage that has plagued DeLay in recent years, likely explains why his name identification has risen from 46 percent to 76 percent between September 1999 and last month, according to several CNN/USA Today/ Gallup surveys of adults nationwide, cited by Democrats. During the same span, DeLay’s unfavorable ratings have swelled from 11 percent to 24 percent, according to the same surveys.

Tom DeLay, Terri Schiavo and God

Tom DeLay seems to be conflating himself with Ms. Schiavo, conservatism in general and the mysterous ways of the Almighty, as reported in the NYT:

On Friday, as the leaders of both chambers scrambled to try to stop the removal of Ms. Schiavo's feeding tube, Mr. DeLay, a Texas Republican, turned his attention to social conservatives gathered at a Washington hotel and described what he viewed as the intertwined struggle to save Ms. Schiavo, expand the conservative movement and defend himself against accusations of ethical lapses.

"One thing that God has brought to us is Terri Schiavo, to help elevate the visibility of what is going on in America," Mr. DeLay told a conference organized by the Family Research Council, a conservative Christian group. A recording of the event was provided by the advocacy organization Americans United for Separation of Church and State.

"This is exactly the issue that is going on in America, of attacks against the conservative movement, against me and against many others," Mr. DeLay said.

Mr. DeLay complained that "the other side" had figured out how "to defeat the conservative movement," by waging personal attacks, linking with liberal organizations and persuading the national news media to report the story. He charged that "the whole syndicate" was "a huge nationwide concerted effort to destroy everything we believe in."

"Castle gets earful on Social Security"

Congressman Mike Castle held a public meeting on Social Security last night, and said it was the largest crowd he had seen since he went to Washington. As one of the moderates in the Republican caucus, his vote would be important if Bush's private accounts ever comes to a vote. Here's a paragraph from the story in the News Journal:

And when the subject turned to the idea of letting younger workers opt to put some of the tax money into individual savings accounts - a key part of reforms proposed by Castle's fellow Republican, President George W. Bush - Delaware's lone U.S. House member got an earful and an eyeful.

Tuesday, March 22, 2005

Public Opinion on the Shiavo Case

In the midst of the intense coverage of the last few days, here's an ABC poll that finds that 63% of those surveyed support the removal of Terri Shiavo's feeding tube, and that 60% oppose federal intervention. When asked about their own wishes, 78% said that they would not want to be kept alive in this condition.The heavy coverage of this issue has prompted half of those surveyed to discuss with their families what they would want done in similar circumstances.

Monday, March 21, 2005

Mr. Castle Votes Nay

Congressman Mike Castle was one of five House Republicans to vote against S.686, the bill to allow the parents of Terry Schiavo to take their case to keep her on life support to the federal courts. I have not seen any statements from Rep. Castle on his vote, which must have been difficult given the intensity of emotions on this issue.

SpongeBob Bloggermann

Keith Olbermann of MSNBC's Countdown says he has read every e-mail he's received since running a story on the Rev. Jim Dobson's SpongeBob SquarePants conspiracy theory. He includes a few gems in his most recent post, "More Sponge Bob from Jim Dob" on Bloggermann.Olbermann also uses the latest ratings to point out that Fox has not come to dominate television news the way its partisans would like to believe.

Sunday, March 20, 2005

Income Volatility and SS

Volatility - the degree to which the value of an asset deviates above or below the general trend - is a concept with which investors are familiar. Some stocks can prove more risky - or more rewarding - than others because they rise or fall by a greater degree than the market as a whole, while others tend to track the overall market's performance closely. But the concept of volatility is less well understood when it comes to income. As we learn more about income volatility in the information age, some scholars say, Social Security - an insurance program designed for the industrial age - may be even more essential.

Friday, March 18, 2005

This Just In

I think it's a nutty idea to fool around with the Social Security system and run the risk of [hurting] the people who've been saving all their lives.... It may be a new idea, but it's a dumb one.

Of course, the elder Bush once referred to Reagan's supply side ideas as "voodoo economics."His comment was in response to former Delaware Governor Pete duPont, who was pushing the idea way back when. You can find Pete's latest diatribe on SS titled "Socialism's Last Redoubt" in last month's WSJ Online. In 2000 Pete published a column in the same space titled "Gore Carries the Porn Belt" that suggests that "blue state" may have a different meaning.

Wednesday, March 16, 2005

"Personal accounts do not solve the issue."

Tuesday, March 15, 2005

It's Lonely at the Top

Another imperial CEO, Maurice Greenberg of AIG, was shown the door yesterday, joining Harry Stonecipher of Boeing, Franklin Raines of Fannie Mae, Carly Fiorina of HP and Michael Eisner, whose reign at Disney is being cut short by its board. Last year Charles Cawley of MBNA was quietly eased out of the credit card giant he started.This NYT analyis includes some comments from corporate governance expert Charles Elson here in Delaware:

After the collapse on Enron in late 2001 and WorldCom in 2002, Congress required more vigilance by directors, auditors and other gatekeepers in the Sarbanes-Oxley corporate-overhaul law. That measure, which strengthened auditor independence and made boards more responsible for financial results, created a model of corporate governance that is "designed as a circuit breaker," said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "Lately, the signal is that the governance mantra is actually working."The question is, Are boards getting too active? Are they pulling the trigger too quickly? I don't think so," Mr. Elson said. "They are looking at these terminations over the long term."

Monday, March 14, 2005

Mercury Rising

The Bush adminstration is releasing new regulations that would allow the trading of mercury emissions credits. The idea of trading emissions credits is to let the marketplace find the most efficient way to reduce pollution.This can make sense for emissions like sulfer dioxide that affect large regions. Reductions in SO2 emmissions in the Midwest are linked to reduced acid rain on the east coast.But mercury is a heavy metal that doesn't travel as far as lighter gases and is more likely to settle and accumulate close to its emission source.If a power plant operator finds it less expensive to purchase mercury emissions credits than cut its emissions, those who have the misfortune to live near that power plant may not see any reduction at all in releases of this toxic metal.According to DNREC's Toxic Release Inventory, 1,523 pounds of mercury and mercury compounds were released into Delaware's air in 2002. The largest source of mercury pollution in Delaware was Conectiv Power's EdgeMoor/Hay Roads power plants, which released 148 pounds of mercury compounds into the air in 2002. Residents of Northeast Wilmington won't see much benefit if a more modern power plant in the Midwest reduces its mercury emissions. This is likely to happen in urban neighborhoods across the country under these regulations.

Friday, March 11, 2005

Public Utilities and Private Interests

Regulators in Orgeon rejected an attempt by a private equity firm to buy an electric utility, Portland G.E., which is now owned by Enron. (See story.) Why is this important? Private equity firms differ from publicly-traded firms in that they don't have to publish their financial statements.Utilities traditionally operate as regulated monopolies, which means that public utility commissions determine rates based on review of their finances. A privately-held utility would likely be less transparent and less accountable. Another concern here was that of taking on too much debt, a common tactic in taking a company private that could well transfer economic risk to ratepayers.

Thursday, March 10, 2005

Why Private Accounts Won't Increase Private Investment, Part 2

One of the basics of creating a sound portfolio--whether for an individual or a large pension fund--is that part of the portfolio should be so rock solid that one can be assured that it will be there no matter what happens to other investments. This allows the investor to include some riskier securities which, according to finance theory and historical experience, should generate higher returns.Social Security allows us to take on some investment risk to build for the future. Take away the guarantee and we will all have to reduce the risk in our investment portfolios.This is another reason why Bush's privatization won't increase investment in equities.

Why Does the Campaign for City Controller Matter?

I noted here a week ago that John Braxton had gotten some attention as a reform-minded candidate for city controller. Why should we care who holds this office? Two reasons come to mind:First, someone who is more than a loyal party soldier in the position could set a higher standard for conduct among elected officials.Second, an independent, forward thinking controller could identify ways in which city government could become more efficient and effective.For those who would like to see genuine change in Philly, check out John's website. And if you missed it, check out this posting in Young Philly Politics.

"Can I sit here with you and have coffee?"

Here's one story about the human cost of lawless anti-government violence. The NYT has this story on the Chicago judge whose husband and mother were murdered last week:

CHICAGO, March 9 - For the 30 years of their marriage, Joan Humphrey Lefkow's husband, Michael, made the morning coffee. He swirled boiling water in the mug to warm it before pouring, then brought it to her in bed. They shared the first cup in silence, and, over the second, plotted another harried day juggling fulltime jobs and four busy daughters.Now, nine days after finding her husband and mother shot dead in their basement, Ms. Lefkow, a judge on the United States District Court, brews her own coffee, warms her own mug. The other morning, she crept across the hall in the corporate apartments where her family has been sequestered under armed guard since the slayings and knocked on the door of her daughter's fiancé, asking, "Can I sit here with you and have coffee?"

Evangelicals Look to the Skies

Evangelicals are meeting to discuss global warming, according to the NYT, and Washington is paying attention:

The Rev. Rich Cizik, vice president of governmental affairs for the National Association of Evangelicals and a significant voice in the debate, said, "I don't think God is going to ask us how he created the earth, but he will ask us what we did with what he created."The association has scheduled two meetings on Capitol Hill and in the Washington suburbs on Thursday and Friday, where more than 100 leaders will discuss issuing a statement on global warming. The meetings are considered so pivotal that Senator Joseph I. Lieberman, Democrat of Connecticut, and officials of the Bush administration, who are on opposite sides on how to address global warming, will speak.

Cloudy Skies in the Senate

The "Clear Skies" bill has failed to clear the Senate Environment and Public Works Committee. The NYT article describes how George Voinivich (R-Ohio) and Tom Carper (D-Delaware) tried and failed to craft a compromise on the bill:

Three previous committee votes were postponed when a tie seemed certain and committee members expressed a willingness to negotiate a compromise. Leading the efforts were two friends from their days as governors, Senator George V. Voinovich, an Ohio Republican who co-sponsored the bill with Mr. Inhofe, and Senator Thomas R. Carper, Democrat of Delaware. They met nine times since early February to narrow differences.

The talks ended after Mr. Voinovich said Republican compromises received no Democratic response, and Mr. Carper said his requests for more timely data from the Environmental Protection Agency were ignored.

Wednesday, March 09, 2005

Why Private Accounts Won't Increase Private Investment

One of the arguments for setting up private accounts using SS payroll taxes is that it would make billions of dollars available for investment in the stock market. A new blog, The Cunning Realist (referenced in TPM), recounts a conversation in which an unnamed CEO offers one reason for supporting private accounts:

“He told me that he and many of his colleagues at other companies favor the creation of private accounts, because a new source of demand for his stock will help compensate for the increasing unattractiveness of his company from an investment perspective."

The fallacy of this argument lies in overlooking the diversion of private capital to U.S. government debt to finance Bush’s privatization scheme. No new investment dollars are created. One can go back and read Robert Rubin on how reducing debt enhanced investor confidence in U.S. markets and increased overall investment. Of course, the Bushies use the word “Rubinomics” as a pejorative.

Cops and Terrorists

A Government Accounting Office (GAO) report finds that 35 of 44 suspects on the FBI terror watch list, identified during routine background checks, were able to buy guns in a five month period last year. Federal law did not allow the FBI from taking any action preventing these gun purchases. The New York Times reported that, “Of these people on terror lists trying to buy guns, the report said 35 sales were allowed to go ahead because the background checks found no disqualifying information.”Federal law mandates that records of the background checks be destroyed in 24 hours, with no exceptions, even for individuals on the FBI’s terror watch list.

Monday, March 07, 2005

Delaware GOP Mess

Here's the story on the internal fight in the Delaware GOP from the News Journal, Delaware Grapevine and from DelDem on Daily Kos.Apart from the morbid pleasure of watching a catfight, we should keep in mind that the Delaware GOP is fighting over politics: whether to continue with the waning legacy of Mike Castle centrism or veer to the rabid right. The fact that a Swiftie had the podium is worth noting, as is the ferocity of the attack on Strine.

Saturday, March 05, 2005

ING Direct CEO Criticizes Bankruptcy Bill

Arkadi Kuhlmann, CEO of ING Direct in Wilmington, has taken a very public stand against the bankruptcy bill pending in congress. Here's the News Journal story.

In the last week, Kuhlmann took part in a Democratic news conference in Washington, wrote a letter to the American Bankers Association and placed an ING ad in the Washington Post criticizing the bankruptcy bill.

Friday, March 04, 2005

Senator Carper on "Clear Skies"

Senator Tom Carper reiterated his opposition to Bush's "Clear Skies" bill and said the congress can and should do better. Here's an excerpt from his press release:

WILMINGTON, DE (March 4, 2005) – Sen. Tom Carper, D-Del., today joined local environmental groups to urge the Senate to take up and pass clean air legislation this year that would better protect Delaware’s air quality than President Bush’s so-called “Clear Skies” proposal.

...

Carper said he hopes a bill he previously authored could serve as a basis for a bipartisan deal that can pass the Senate. In the last Congress, Carper was the primary sponsor of the bipartisan Clean Air Planning Act, which would more quickly reduce power plant emissions of mercury, NOx and SOx, while providing needed flexibility for power plants to meet new pollution targets.

In other words, Carper is saying that he can do a better job of crafting environmental legislation with bipartisan support than Bush.

Thursday, March 03, 2005

Getting the Real Story on "Gannon"

Democrats on the House Judiciary Committee plan to push for a vote on investigating how "Jeff Gannon" got into the White House with a false name and gained access to information about Valerie Plame being a CIA operative. Outing her was a crime, and "Gannon" may have have a hand in, or at least some information about, this sorbid act. You can read more at Daily Kos and see the draft resolution here thanks to Raw Story.By the way, this is the real story, not the sleazy stuff about "Gannon's" day job.

GOP Playbook

Frank Luntz is a GOP pollster who has been helping to shape the Republican message for years. (Where do you think they came up with "death tax"?)His "playbook" or manual on political messages has been posted on Daily Kos. Read it here.

Reform in Philly?

Philadelphia has a chance to elect a genuine reformer as the next city controller.Here's part of a post on Young Philly Politics:

John Braxton, former Common Pleas Judge, running to replace outgoing Controller Jonathan Saidel, also sounded the reform note, and sounded it loudly. I do not know too much about Braxton, but I can tell you that he spoke eloquently about the need for reform and change, and maybe most telling, a Philly for Change member who knows him got up when he was finished and said he was the type of person we need in office, which was certainly a good sign. (A message has a lot more impact when delivered by people you trust. I do not even know the woman who spoke, but, given the way she was spending her Wednesday night, and the way she spoke about Braxton, her speech made me a believer.) Braxton, like Williams will have to win without support of the party apparatus, which will be supporting loyal party soldier, Rep. Alan Butkovitz, who I also do not know anything about.

Imagine that: a candidate for city controller who "sounded the reform note" instead of being a "loyal party soldier."